The open marketplace (OMP) no longer serves its purpose.
Consumer choice coupled with cookie deprecation has reduced addressability to 30%. By Q4 of next year, Google will start phasing out third-party cookies in Chrome. With legacy ad tech and ID solutions, publishers and brands can no longer use audience data, control frequency and measure reach. As a result, publisher OMP revenue is in free fall, and brands are losing market share.
Publishers are experiencing this trend with a 25% YOY drop in OMP revenue in Q4 2022.
According to eMarketer data on the US market, projections indicate that direct-sold ads will account for 75% of total programmatic digital display ad spend by 2024, while OMP will only make up 8.5%. And with supply-path optimization, spending is moving out of the open marketplace to more direct channels.
As the OMP collapses, publishers aren’t just off-setting losses with direct-sold programmatic; they’re building bigger businesses by unlocking the 70% of consumers brands can’t reach in the OMP.
Publishers taking control with direct-sold programmatic
The OMP favors third parties vested in maintaining a system where publishers face an ad tech take rate of more than 50 cents on the dollar, not to mention complicated supply paths. Given the revenue loss and data leakage, publisher CROs must realize that they have to take control and keep 100% of their revenue. As data owners, publishers are the next generation of digital advertising, not third-party ad tech.
Publishers must differentiate their direct-sold product from the OMP. In the OMP, brands that spend most of their budget only reach 30% of their audience. Meanwhile, direct-sold allows brands to reach 100% of their audience – and the publisher captures all of the spend. It’s up to publishers to show brands they are losing their share of voice by buying in the open.
By using insights to tell that story and an activation platform to deliver on the promise of reach, publisher CROs can significantly drive revenue increases for their publications without brands having to increase their spend.
Success with direct-sold today
Innovative publishers are already unlocking the value of their endemic and non-endemic audiences by shifting their strategies to direct-sold. Ranker, for example, can create high-intent audiences based on first-party data collected from audience data and create lookalike audiences. The publisher uses pre-sale audience affinities to craft proposals and post-sale analysis, helping position campaign success and insights back to their brands. For Ranker, it resulted in increased performance: a 4x increase in revenue year-on-year and a 25% increase in their RFP win rate.
On our platform, we’ve noticed publishers have seen a 37% increase in direct-sold audience revenue in Q4 2022, accelerating to 55% in Q1 2023.
For publisher CROs, a tiny change in direct sales offsets enormous losses in the open, with OMP CPMs in decline and 50% of the revenue going to ad tech, versus 100% of revenue coming to a publisher at 10x the CPM in direct-sold. Growing direct sales will take us to a point where publishing isn’t just a sustainable business; it’s a growth business.
The opportunity ahead
Publisher CROs need to ensure they monetize 100% of their audience and build deeper, longer-term relationships with brands. Meanwhile, brands must audit the consumers they can reach today in the OMP and reach out to publishers to unlock those audiences.
Taking these actions now will result in an advertising ecosystem where ad spend isn’t wasted, and publishers have control of their revenue.
“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
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